Council Member Ben Kallos Shares Perspective On Airbnb

Ben Kallos is a Democratic member of the City Council representing the Upper East Side and Roosevelt Island. A third generation Upper East Sider and graduate of SUNY, Mr. Kallos is a tried and true New Yorker. Prior to joining the City Council, Mr. Kallos was an attorney. During his time as an attorney, he became increasingly interested in the tech world, founding www.WikiLaw.org. As a member of City Council, he hopes to use technology to make government “transparent, accountable, and open.” In his campaign for City Counil, Mr. Kallos gained the support of Craiglist founder Craig Newmark. While per Attorney General Schneiderman’s own admission, government can be slow to catch up to technology; Mr. Kallos is bridging the gap with his experience in the tech field.

As a major supporter of Silicon Alley, Ben Kallos characterizes Airbnb’s legal issues from a different perspective. In a phone interview with Betabeat, he said, “I approach this as a technology entrepreneur. I have run tech start ups and I am fairly supportive of existing companies in the marketplace […] and making sure that regulations are put in place so that they could exist.” He cites Craigslist as an example of start up that did everything right to become a tech super power.

This is dramatically different from the rhetoric of some fellow New York Democrats, including Mr. Schneiderman, who has been terrorizing the hot start-up and State Senator Liz Krueger, who told Betabeat earlier this week that “Airbnb does not give a damn” about New Yorkers.

While Mr. Kallos says he has rented and found apartments on Craiglist in the past, his take on Airbnb is more complex. It is influenced by the affordable housing issue that faces his district in Manhattan. “With Airbnb, the issue I have is I have an affordable housing problem in my district, and the mayor has highlighted we have an issue in our city. New York City is in a housing crisis. We have less than five percent vacancy in our apartments. That is statutory. Every year, we do a survey. If we have less than five percent, we have a housing crisis.”

The affordable housing crisis influences Mr. Kallos’ opinion of Airbnb in two ways: their service affects supply and demand, and it allows residents in affordable housing to circumvent regulations of these housing developments, potentially living elsewhere while they rent their home on Airbnb.

The rentals Mr. Kallos was particularly concerned with were one- and two-month options. He took it upon himself to search for two month rentals since Airbnb did a clean up of “bad actors” earlier this week, and still found over 800 listings available. As for weekenders, while he notes they are in violation of the law and their lease, he believes the larger issue is going after the longer stay, mass rental hosts: “One or two months, that is literally a bad actor that Airbnb is facilitating and rather than doing something responsible, like turning over the lease, [the hosts] are taking up a unit of housing that we need desperately in the city and engaging in arbitrage.”

As for Airbnb’s assertion that they are helping families by supplementing their incomes, on average by $7,530, Mr. Kallos believes the company is actually hurting itself with this argument. “That’s an average [income] which honestly scares me. That means a person charging $100 a night is renting out 73 times a year. That’s a lot of times to be away for a weekend. That is not someone using it to supplement their income, that’s someone engaging in a substantial rental. If the average income was $200 a year, that’s one weekend, that indicates [Airbnb] is serving a market function. I believe their argument works against them to show people are using it for an extraordinary amount of time.”

Mr. Kallos also took on the urban apartment market study Airbnb commissioned from UC Berkeley professor Ken Rosen. He was not convinced that Airbnb did not impact New York’s housing crisis, “When we are talking about thousands of units on Airbnb, where the average is this $7000 number, it indicates the people sleeping in the unites are not New Yorkers. The argument works against them. To have Airbnb tell me that renting thousands of units above market rate does not affect the market flies in the fact of jurisprudence, the law and common sense.”

Though he is strongly convinced New York’s housing market is affected by Airbnb, Mr. Kallos believes the company can coexist with existing city laws and regulations. “I think the best part of a being a tech start up is being agile and having a process that reacts to internal and external challenges. I’m hoping they can adapt and come back with a business model that supports New Yorkers and protects New Yorkers.”

As for what that business model might be, it remains to be seen, though Mr. Kallos does suggest they consider a business model “closer to Couch Surfing, which might not be as profitable, but it is legal because people are renting out as roommates.”

Betabeat is now the newly launched Innovation section of the Observer. All your favorite features and columns—as well as exciting new areas of tech coverage—can now be found at Observer.com/Innovation.

Don't miss the latest and best writing on technology and the future of business innovation. Add the Innovation section to your RSS feed and follow the Observer on Twitter and Facebook.